Surround sound decoding
When Blu-ray was introduced, it brought with it a clutch of new audio formats designed to offer high-resolution sound "as the director intended" to accompany those gleaming high-definition pictures. These formats - Dolby True HD, DTS HD Master Audio, DTS-HD High Resolution Audio and Dolby Digital Plus - are designed to offer superior sound quality to their regular Dolby Digital and DTS predecessors, and in the case of the lossless (uncompressed) Dolby True HD and DTS HD Master Audio formats, they allow a precise representation of the original movie's studio master soundtrack.
Given the growing popularity of Blu-ray players, the vast majority of current AV receivers are now capable of decoding these formats, although it's not guaranteed. Some recent budget models like the Yamaha RX-V367 only support Dolby Digital and DTS. Even if a receiver doesn't include the relevant decoders, it should still be able to accept decoded multichannel PCM signals from Blu-ray players without any degradation in sound quality.
Sophisticated digital signal processors inside most AV receivers can adapt the characteristics of the sound to suit different purposes. For instance you may like your music to sound like it's being played in a Jazz Club in Korea, and the receiver will apply the appropriate algorithms to make that happen.
Similarly, most receivers offer modes that take stereo material and expand it to fill the 5.1 speaker setup, which is great for TV viewing. The most common of these "virtual" surround modes is Dolby Pro Logic II which comes in various guises - Pro Logic IIx, which is designed to expand the sound to 7.1 channels, and the latest incarnation, Pro Logic IIz. Not only can this make stereo content sound like it's being played in surround, but it can also creates a pair of "front height" channels, which are designed to emerge from speakers placed high up at the front of the room (ideally above the TV).
The idea is that the soundstage is expanded vertically as well as horizontally, making it sound as though effects are coming from above your head. The processor detects extracts non-directional effects and ambiance and sends them to these front height channels. It can be very effective with the right material, particularly rainy movie scenes and video games. The problem is that installing speakers at the front of the room above the TV could be tricky and ungainly, plus with a 7.1-channel receiver you have to choose between having surround back or front height channels â€“ only a 9.1-channel receiver will allow you to have both.
A similar technology is Audyssey DSX, which not only creates front height but also front width channels that throw effects even further across the front soundstage.